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The negotiations between regional carrier Swiss European Air Lines and the Swiss Pilots Association (SPA) union, which represents the company’s pilots, have broken down. Swiss European will now unilaterally improve the individual employment contracts of its pilot corps.Despite concessions made by Swiss European, the negotiations broke down as a result of the SPA’s unrealistic and excessively high salary demands. Swiss European regrets this, and appeals to the union’s sense of responsibility towards the company’s customers and all employees. Swiss European remains willing to resume a dialogue with the SPA.

After months of negotiations, Swiss European, which is the separate regional airline of Swiss International Air Lines, and the SPA reached agreement on a new Collective Labour Agreement (CLA) in March of this year. The proposed new CLA was also approved in a referendum by a clear majority of the company’s regional pilots. Regrettably, however, the new agreement could not enter into effect, because such approval fell short of the substantial two-thirds majority of SPA members required under the union’s regulations. The referendum was further overshadowed by vote manipulation by members of the union’s executive committee.

As a result of these developments, the previous CLA was superseded in April 2006 by individual employment contracts for the regional pilots concerned. These contracts were intended to be a bridging solution, until a new CLA was adopted; and in devising them, Swiss European assumed that a new CLA could be concluded within a reasonable time.

To this end, Swiss European resumed talks with a newly-formed SPA executive committee in summer 2006. Despite these ongoing discussions, however, the SPA instructed its members to take strike action on September 26. Shortly after this disproportionate and illegal industrial action, the CLA negotiations were resumed as previously agreed. But these negotiations have so far failed to produce agreement between the two parties.

Swiss European has compiled a balanced offer for its regional pilots which, its Executive Management believes, pays due and fair regard to the company’s interests, those of its employees and those of the SPA. The package proposed includes modifications to salaries, working hours and vacation entitlements. In many respects, indeed, the new package is closely aligned to the terms and conditions of employment of the Swiss International Air Lines Airbus A320-family pilot corps. For the salaries of its regional pilots, however, Swiss European must tailor its offer to general market conditions in the regional (50-to-100-seat) aircraft segment in which these pilots work.

The SPA’s one-sided emphasis on maximising its members’ salaries is unacceptable to Swiss European. In addition to the legitimate interests and concerns of all employees, the Board of Directors and Executive Management of Swiss European Air Lines must give prime priority to maintaining the company’s ability to compete. Only by remaining competitive can Swiss European secure the long-term future of the jobs it offers. In compiling the latest package, Swiss European has gone to the limit of what it can reasonably offer its regional pilots if it is to remain an economically viable concern.

In its conduct in the present negotiations, the SPA is ignoring the realities of the market and refusing to acknowledge that an Avro RJ regional aircraft, with around 95 seats, is operated in a different business segment and competitive environment than an Airbus A320-family aircraft with an average of over 160 seats. No European airline offers its regional pilots the same salaries as the Airbus pilots it employs.

All SWISS’s employees have contributed to the company’s current restructuring in the interests of its future business success. The CLA which was concluded with the SPA in March 2006 but failed to be ratified by the requisite majority of union members also contained a contribution of this kind. It is, therefore, incomprehensible why the SPA should, only six months later, be making made excessive demands which would raise present costs by some 35%. And it is these demands which have ultimately led to the breakdown of the present negotiations. In adopting this approach, the SPA has also prevented, at least for the present, the development of any viable and forward-looking social partnership.

As a result of these developments, there is little prospect at present of any new CLA being concluded in the near future. In view of this, Swiss European has decided to unilaterally improve its pilots’ present individual employment contracts in salary and working hours terms. These modifications will bring its pilots’ working hours provisions largely into line with those of the pilots on Swiss International’s Airbus A320 family, while their salaries will remain within the band generally paid in the regional market segment.

Swiss European is placing a clear focus on securing jobs within today’s competitive environment and offering a balanced overall employment package. The latest offer which the company has made to the SPA meets these objectives.

Swiss European remains willing to resume a dialogue with the SPA at any time.

Swiss European Air Lines Ltd. - Swiss European, which was founded on November 1, 2005, is a separate fully-owned subsidiary of Swiss International Air Lines Ltd. Swiss European operates in the regional air services segment, on behalf of its parent company. Its fleet currently consists of 24 Avro RJ85/100 aircraft, which are flown by a corps of 260 pilots.